Here’s the latest reader question, along with my reply:
Tom asks: I have an ’02 Accord with a dead transmission; the shop (which I trust) says it can install a rebuilt unit for just under $2k, parts and labor. I’m wondering whether I should just cut bait and put that money toward a new or new to me car? The Accord has about 170k on it and has otherwise been a good car.
My reply: Well, first of all, you’re in a Catch-22 situation. A car that doesn’t move is worth practically nothing; or rather, you will have a hard time getting anything for it. So you face losing more than the cost of a rebuilt transmission. I did a quick consult of my used car value guides and an ’02 Accord with the V6 and automatic that works is worth about $2,500-$3,000 or so.
Without one that works, it’s worth a few hundred bucks. Not just because it needs a $2,000 transmission that does work but also because of the effect not-running has on how the car is perceived. A prospect will be suspicious – understandably – of other problems. A test drive isn’t possible and dragging it via flatbed to a hoist for further inspection is a PITAS too far for most people.
Of course, on the other hand, if you put $2k into a car worth about the same you do not now possess a car worth more than it was worth before you put the $2k in it. Maybe a little more – but not the full $2k more.
So, you lose most of the $2k – but not as much as you’d lose if you didn’t put in the $2k.
You can lessen what you lose to much less – and maybe lose nothing at all – if you keep the car another couple of years and then sell it. The value is recovered in the form of the transportation the car provides – and the new (or new to you) car payments you didn’t make. After a few years, sell the car – the value of which is already plateaued. In other words, if it’s worth say $2,500 today with a good transmission and in otherwise good-to-go condition, it’ll be worth about the same in two years, if it’s still in overall good-to-go condition. After a certain point, miles no longer matter as much in terms of value; only whether the thing is still running and driving.
Finally, there is the tangible – vs. intangible.
You know this car. It is probably a safer bet – in terms of other things going wrong with it – than an unknown used/new-to-you replacement that costs about the same as what you’ve got but with a good transmission… as far as you know. If you have the one in yours replaced, you’ll know the transmission is probably good-to-go for the next ten years or more.
Which is one less potentially major issue to worry about. If the engine is tight and the car isn’t riddled with rust, I’d fix it.
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